Investor confidence on the rise, but not in housing

Investor confidence overall is up but confidence in property has dipped according to the latest ASB report. Photo/Brett Phibbs

Confidence among New Zealand investors has stabilised due to sharemarket growth, although housing confidence has dipped slightly, says a report from ASB.

The latest quarterly investor confidence report showed net investor confidence - the difference between those that think their return on investment would get better or worse in the coming year - had lifted to a 20 per cent net positive result in the last quarter of 2017.

Confidence had been slightly lower in the previous quarter with investors cautious ahead of the September election.

Overall, personal homes followed by rental property was still viewed as being the best investment, although the confidence level had fallen.

ASB senior wealth economist Chris Tennent-Brown said this was consistent with ongoing uncertainty in the housing market.

"A moderation in confidence regarding housing is being seen in Auckland as well as the rest of the country.

"House prices are high, loan to value ration (LVR) restrictions have been tweaked but are still restrictive, and the uncertainty of an upcoming tax review all cloud the picture," he said.

"Changes to the rules that impact foreign property buyers are another area of uncertainty that will be influencing perceptions."

Confidence in investing in a personal home fell from 59 per cent in the third quarter to 56 per cent in the fourth.

Tennent-Brown said there were several factors influencing investor sentiment as a whole.

"The last quarter of 2017 was an amazing quarter for many investments," he said.

"The local sharemarket lifted over the quarter and offshore markets were also positive, boosting returns on many growth-focused funds within KiwiSaver and other managed investments."

The level of confidence in the latest survey showed strong returns could eclipse concerns or uncertainties around the political climate, Tennent-Brown said.

"That's not to say political change is not worth worrying about.

"But performance is where the rubber hits the road and with investment markets performing well, people will take some of the other things in their stride."

Investment confidence has risen significantly in Canterbury. Photo/123RF

The survey also showed expectations hadn't changed significantly over the quarter, despite strong returns last year.

Of the 600 Kiwis surveyed, 31 per cent said they expected better returns in the year ahead compared with 28 per cent in the previous quarter.

About 42 per cent said they expected the coming year's returns to be similar to last year's, compared with 43 per cent last quarter.

The largest increase in confidence was seen in Canterbury which rose by 11 per cent to 29 per cent net positive this quarter.

The region had shown a significant increase in optimistic investors, Tennent-Brown said.

"Beyond this survey, we noticed within ASB's latest Housing Confidence Survey in late 2017 that more people in the [Canterbury] region are now thinking it's a good rather than a bad time to buy a house, although we think it's too early to tell if the soft housing market in the region is turning a corner," he said.

Confidence in savings accounts also improved, with 11 per cent stating that a bank savings account would provide the best return, significantly up from 6 per cent in the previous quarter.